WEBVTT - U.S. Jobless Claims Jump to 3.28M, Virus Update 0:00:00.440 --> 0:00:02.960 This is Bloomberg Business Week. I'm Carol Masser and I'm 0:00:03.040 --> 0:00:05.480 Jason Kelly. We're here every day bringing you the latest 0:00:05.519 --> 0:00:09.800 news from the world's of business and finance, plus technology, politics, economics, 0:00:09.840 --> 0:00:13.480 all harnessing the power of Bloomberg Business Week reporters and editors, 0:00:13.480 --> 0:00:16.759 not to mention our hundred journalists analysts more than a 0:00:16.800 --> 0:00:19.520 hundred and twenty countries. You can download Bloomberg Business Week 0:00:19.560 --> 0:00:22.439 on iTunes, SoundCloud, or Bloomberg dot Com. You can also 0:00:22.480 --> 0:00:24.919 listen to our radio show weekdays at two pm Eastern 0:00:25.000 --> 0:00:28.400 only on Bloomberg Radio. Still with us is our own 0:00:28.480 --> 0:00:31.520 Vince Signarella, Bloomberg News Global macro Strategists, and we want 0:00:31.520 --> 0:00:34.280 to roll into the conversation Peter Chier, head of macro 0:00:34.320 --> 0:00:36.920 strategy at Academy Securities. He's joining us on the phone. 0:00:37.320 --> 0:00:41.360 Um from Connecticut, Vince, give us some idea of what 0:00:41.440 --> 0:00:45.080 you folks have been talking about on Bloomberg's on the 0:00:45.080 --> 0:00:48.800 Bloomberg squat Box, Um, what are you hearing? Well, it's 0:00:48.880 --> 0:00:52.199 really interesting to see the momentum and the enthusiasm in 0:00:52.240 --> 0:00:55.160 the market to say we spoke about this yesterday. Mia Kalpa, 0:00:55.360 --> 0:00:57.320 I think I said something like if we saw a 0:00:57.360 --> 0:01:00.360 three million number of the markets like this. Uh, they 0:01:00.680 --> 0:01:04.440 liked it a lot um, even though absolutely most most 0:01:04.440 --> 0:01:07.160 traders think it's actually underreported. There was a lot of 0:01:07.200 --> 0:01:12.319 problems getting to reporting, especially on the website's jobless claims. 0:01:12.600 --> 0:01:15.319 So next Thursday is probably gonna look even uglier. But 0:01:15.720 --> 0:01:18.120 we're one trader said to me today, He goes, we 0:01:18.280 --> 0:01:22.560 priced the We've priced the recession in the February, and 0:01:22.600 --> 0:01:25.959 now we're pricing the recovery. So markets seem to really 0:01:25.959 --> 0:01:29.919 be jumping way ahead of themselves. Um, you spoke before 0:01:30.520 --> 0:01:32.840 Mr Merphy came on about a roll off. Today it 0:01:32.959 --> 0:01:36.199 rolled off the highs a little bit. Um momentum lost 0:01:36.280 --> 0:01:39.560 when Italy reported a big jump in cases. I think 0:01:39.560 --> 0:01:43.320 it was their rush for five days. Um. And yet 0:01:43.319 --> 0:01:46.080 again traders looking past that and telling me that that's 0:01:46.160 --> 0:01:50.400 just higher because they're testing more. So the market seems 0:01:50.400 --> 0:01:52.800 to want to buy this today. And you know, I 0:01:52.840 --> 0:01:54.400 don't stand in front of it just yet, but I 0:01:54.840 --> 0:01:57.760 do believe. Um, certainly there is going to be worse 0:01:57.800 --> 0:01:59.560 to come, and there will be other opportunities to get 0:01:59.560 --> 0:02:02.120 in if you didn't get into today. So Peter chair 0:02:02.200 --> 0:02:05.040 coming in here, h was reading your report from yesterday 0:02:05.080 --> 0:02:08.639 with great interest talking about needing a bigger boat. I 0:02:08.720 --> 0:02:12.120 like the metaphor there help us understand sort of what 0:02:12.240 --> 0:02:14.600 that is and when we may need it. So I 0:02:14.639 --> 0:02:17.359 think I look at it from two different perspectives. One 0:02:17.440 --> 0:02:19.760 is what the set is doing, and the SAID basically 0:02:19.800 --> 0:02:22.160 went all in over the weekend and on Monday morning, 0:02:22.440 --> 0:02:24.400 and I think the entire market now believes that the 0:02:24.520 --> 0:02:27.400 SAID will be responsive. I think when we look though 0:02:27.440 --> 0:02:29.959 at what is going through as the Cares Act, it's 0:02:30.000 --> 0:02:32.799 a little bit light in a few places, and I 0:02:32.840 --> 0:02:36.000 think ultimately, as soon as that gets passed, they're gonna 0:02:36.040 --> 0:02:38.400 have to start talking about a more CARES or a 0:02:38.400 --> 0:02:41.079 Cares Act to um to fulfill some of the needs. 0:02:41.080 --> 0:02:43.880 And I think that's what the market's gonna wind up needing. Yeah. 0:02:43.919 --> 0:02:47.400 I do think what's interesting already the conversation Peter is 0:02:47.840 --> 0:02:50.040 you know phase four and phase five, and when we 0:02:50.040 --> 0:02:52.080 get on the other side of this virus, we're still 0:02:52.120 --> 0:02:55.040 going to need our companies and individuals are still going 0:02:55.080 --> 0:02:58.600 to need assistance on the other side of this. Yeah. 0:02:58.760 --> 0:03:01.280 I think we need really two things, and one is 0:03:01.320 --> 0:03:03.520 to make sure that people can make their payments and 0:03:03.520 --> 0:03:06.640 get paid and live their lives. But it's going to 0:03:06.680 --> 0:03:09.720 be crucial to the returnaround that things don't get bogged 0:03:09.760 --> 0:03:12.200 down and someone missing a rent payment, and that involving 0:03:12.280 --> 0:03:15.760 lawyers or various other things. It's that aspect that they 0:03:15.760 --> 0:03:18.000 will make the turnaround when it comes time to do 0:03:18.040 --> 0:03:20.239 it much slower. So I think there's a lot of 0:03:20.280 --> 0:03:22.200 progress that's still got to be made in that front. 0:03:22.400 --> 0:03:24.519 In terms of how we're going to deal with miss payments, 0:03:24.840 --> 0:03:26.560 making sure people have enough so they don't have to 0:03:26.600 --> 0:03:29.040 miss those payments. That's going to be I think where 0:03:29.040 --> 0:03:31.160 the you know, Congress in the Senate have to focus 0:03:31.240 --> 0:03:33.760 next well and quickly something like that, if you're not 0:03:33.840 --> 0:03:36.280 making your mortgage payments or something, then it becomes more 0:03:36.280 --> 0:03:39.640 of a financial potentially crisis, right if the banks aren't 0:03:39.640 --> 0:03:42.080 getting the money that they're counting on. And this to 0:03:42.120 --> 0:03:44.360 me has really been what I'm calling a bottoms up 0:03:44.480 --> 0:03:46.480 problem where it starts with workers not being able to 0:03:46.480 --> 0:03:48.280 make their payments, which is very, very different than the 0:03:48.280 --> 0:03:52.120 financial crisis, which was largely a top down problem. So 0:03:52.120 --> 0:03:53.480 I think it's going to take a different set of 0:03:53.520 --> 0:03:56.360 circumstances to address it. But I do think we've got 0:03:56.360 --> 0:03:57.960 some room for the upside in the markets in the 0:03:57.960 --> 0:04:02.520 near term, um given where equity are given some optimism. 0:04:02.600 --> 0:04:04.680 And again, you know, while the virus has been bad, 0:04:05.040 --> 0:04:07.440 so there are signs maybe that we can beat this. 0:04:08.680 --> 0:04:12.640 So build on that thought, Vince Signarella, because what I 0:04:12.760 --> 0:04:15.520 hear Peter saying and Caroline, I've been talking about this 0:04:15.560 --> 0:04:17.680 a lot over the past few days is the devil's 0:04:17.720 --> 0:04:20.400 in the details. Clearly that was one of the things 0:04:20.480 --> 0:04:24.680 that was holding up this stimulus or rescue package from 0:04:24.720 --> 0:04:29.320 passing the Congress. From an investor's mindset, are they is 0:04:29.360 --> 0:04:31.800 the market overall less worried about the details and more 0:04:32.440 --> 0:04:36.480 uh concerned with sort of directionally what's happening. Yeah, I 0:04:36.520 --> 0:04:39.440 think it's a little bit of both. Again, One key 0:04:39.480 --> 0:04:42.240 to me was there were problems in the credit markets, 0:04:42.480 --> 0:04:45.000 and we kind of saw this rolling problem where started 0:04:45.040 --> 0:04:47.440 in high yield and emerging markets and moved along dated 0:04:47.480 --> 0:04:49.960 investment grade, and it was moving to that front end 0:04:50.000 --> 0:04:52.240 and it was really kind of coming up the system. 0:04:52.320 --> 0:04:55.080 Even commercial paper was struggling, which was the very front 0:04:55.160 --> 0:04:57.480 end one year and last when the FED came in, 0:04:57.640 --> 0:05:00.280 it freed that up. So I think it took any 0:05:00.320 --> 0:05:03.440 sort of corporate liquidity crisis off the table. That's a 0:05:03.480 --> 0:05:06.440 big factor for you know, the markets, and I do 0:05:06.480 --> 0:05:09.240 think investors are being a little bit rational and you see, Okay, 0:05:09.320 --> 0:05:11.839 who's going to benefit from this? Who doesn't do well 0:05:11.920 --> 0:05:14.520 when this plays out? And some sectors frankly, just are 0:05:14.600 --> 0:05:16.719 so oversold if you look at it. The energy sectors 0:05:17.000 --> 0:05:19.960 doing okay today despite the fact that oil is going 0:05:20.000 --> 0:05:22.680 down again. Yeah, exactly, Vince, come on, and I know 0:05:22.720 --> 0:05:25.279 you wanted to say something as well. I think Peter 0:05:25.360 --> 0:05:28.240 makes a great point, especially that bottom bottom up approach 0:05:28.240 --> 0:05:30.800 as opposed to the financial crisis. I think you know 0:05:30.920 --> 0:05:33.880 that what what everyone seems to be wanting to know 0:05:34.040 --> 0:05:38.599 for sure and hoping that the Washington doesn't move people 0:05:38.640 --> 0:05:41.839 back to work too soon, is getting the health part 0:05:41.839 --> 0:05:43.520 of the equation right. If we get the health part 0:05:43.560 --> 0:05:46.000 of the equation right, we know we're going to have 0:05:46.040 --> 0:05:48.279 a poor second quarter. We know there's going to be 0:05:48.320 --> 0:05:52.760 some transition potential recession if we get another poor third quarter. 0:05:53.240 --> 0:05:56.599 But the general feel of investors and the people I 0:05:56.600 --> 0:05:59.120 talked to on the street is fourth quarter should turn 0:05:59.160 --> 0:06:01.520 this around, especially what holiday spending, and we should have 0:06:01.560 --> 0:06:04.000 a little zest in that the first quarter of next 0:06:04.040 --> 0:06:06.640 year should be good as well. You know, if you 0:06:06.800 --> 0:06:10.360 wanted to say pricing this with forward earnings, we're obviously 0:06:10.400 --> 0:06:13.840 looking past potentially two quarters at this point. It may 0:06:13.839 --> 0:06:16.080 be looking a little too past. We're definitely going to 0:06:16.120 --> 0:06:19.640 see some ugly numbers coming up, both the unemployment numbers 0:06:19.640 --> 0:06:23.800 and bullets said we could see, which is amazing. Um. Yeah, 0:06:23.880 --> 0:06:26.320 So I was just one other thing. I think people 0:06:26.320 --> 0:06:28.480 are starting to talk about it. It's probably a bit premature, 0:06:28.600 --> 0:06:31.560 but what sort of true fiscal stimulus will we see 0:06:31.600 --> 0:06:34.040 once people are able to go back to work and socialize, 0:06:34.440 --> 0:06:37.400 and will we see a repay creation of some of 0:06:37.400 --> 0:06:39.760 the supply chains. And I think that is actually gonna 0:06:39.760 --> 0:06:42.160 be an important factor. I think companies are going to 0:06:42.240 --> 0:06:45.480 reconsider what their supply chains look like, and maybe their 0:06:45.480 --> 0:06:47.920 supply chain should look a little bit like their customer base, 0:06:48.320 --> 0:06:50.320 and that could be a big boon to growth here 0:06:50.320 --> 0:06:52.200 in the third and fourth quarter in early next year. 0:06:52.400 --> 0:06:54.880 But we do have to be concerned about how steep 0:06:55.279 --> 0:06:58.320 this drop is, right because people out of work, it's 0:06:58.320 --> 0:07:00.600 harder sometimes to get them back to work, and I 0:07:00.600 --> 0:07:04.120 do wonder about that. Peter just got about thirty seconds 0:07:04.120 --> 0:07:06.920 here yes. Again. I think that's why Congress has and 0:07:07.560 --> 0:07:10.280 the Sun has to act aggressively and quickly. And I 0:07:10.360 --> 0:07:12.720 keep trying to remind people Lehman was not a moment. 0:07:12.920 --> 0:07:16.160 Stock markets were up after Lehman. The stock market never 0:07:16.200 --> 0:07:19.000 recovered after the sales PARP vote. So I think it's 0:07:19.040 --> 0:07:21.920 important to get these things quick and pile them on 0:07:21.920 --> 0:07:24.680 on top of each other to prevent that downfall, because 0:07:24.720 --> 0:07:28.200 I do agree that psychological impact of the downfall once 0:07:28.240 --> 0:07:31.480 it's too long is really hard to recover. Yeah, all right, 0:07:31.520 --> 0:07:33.280 we're gonna leave it there, gentlemen. Thank you so much. 0:07:33.360 --> 0:07:37.440 Vince Signarella, Global macro strategist for Bloomberg. Check that out 0:07:37.840 --> 0:07:40.200 on the terminal. Just go to your launch pad if 0:07:40.200 --> 0:07:43.360 you're on the Bloomberg and type squawk and Peter Cheer 0:07:43.840 --> 0:07:45.920 always great to catch up with you as well. We 0:07:46.040 --> 0:07:49.680 really appreciate your insights. Head of macro Strategy at Academy Securities. 0:07:49.720 --> 0:07:53.120 Journey us on the phone from New Canaan, Connecticut. You're 0:07:53.160 --> 0:07:56.920 listening to Bloomberg Business Week with Carol Messer and Jason 0:07:57.000 --> 0:08:00.720 Kelly on Bloomberg Radio. Let's get into the medical side 0:08:00.720 --> 0:08:03.600 of this. Lucky for us, we have a great relationship 0:08:03.640 --> 0:08:07.239 with the Johns Hopkins Bloomberg School of Public Health. UH, 0:08:07.240 --> 0:08:09.280 you may know why. The Bloomberg School of Public Health 0:08:09.320 --> 0:08:11.320 is supported by Mike Bloomberg, founder of Bloomberg LP and 0:08:11.360 --> 0:08:15.040 Bloomberg philanthspies. Dr Artro Costa Deval is the chair of 0:08:15.080 --> 0:08:20.880 the Department of the Molecular Microbiology and Immunology UH group. 0:08:21.120 --> 0:08:25.360 There he joins us on the phone from Baltimore. Dr Castatoval, 0:08:25.440 --> 0:08:27.400 thank you so much for spending some time with us. 0:08:28.560 --> 0:08:31.520 Thank you for inviting me. All right, so help us 0:08:31.640 --> 0:08:37.360 understand what we've learned medically about this and specifically, I 0:08:37.400 --> 0:08:41.640 know you're leading an effort around antibodies from recovered patients. 0:08:41.840 --> 0:08:46.360 Help us understand what you're learning. So, UM, we are 0:08:46.559 --> 0:08:51.160 trying trying to get in plays an all therapy something 0:08:51.200 --> 0:08:54.240 that's been around for over a hundred years, which is 0:08:54.360 --> 0:08:57.880 that you can take the antibodies from people who recover 0:08:58.559 --> 0:09:03.880 and used them treat or prevent disease in people who 0:09:03.920 --> 0:09:08.720 are susceptible. And these antibodies that transferred by plasma. So 0:09:08.760 --> 0:09:12.520 what you do is you get people who recovered to 0:09:12.640 --> 0:09:16.320 donate plasma, you test the plasma for antibodies, and then 0:09:16.400 --> 0:09:20.959 you use that plasma on people who need it. So 0:09:21.000 --> 0:09:24.640 how easily is it to do? I mean, obviously it 0:09:24.760 --> 0:09:26.679 was easy, we'd have it done. But talk to us 0:09:26.679 --> 0:09:29.480 about how easy in this current situation where we're we've 0:09:29.520 --> 0:09:33.560 got a health system that's being stressed, UM, just trying 0:09:33.600 --> 0:09:36.480 to take care of the increasing number of patients, especially 0:09:36.720 --> 0:09:38.679 in some of those hard hit cities be at New York, 0:09:38.760 --> 0:09:42.120 being on the West Coast, and elsewhere around the world world. 0:09:42.400 --> 0:09:46.480 So UM, So from a point of view of logistics, 0:09:47.240 --> 0:09:51.160 this is something that the medical system knows how to do. Uh. 0:09:51.920 --> 0:09:57.440 The Food and Drug Administration provided UH her mission yesterday 0:09:57.480 --> 0:10:01.360 for his compassion to use. Uh. It is um going 0:10:01.400 --> 0:10:05.480 to put a tax on resources. But on the other hand, 0:10:05.960 --> 0:10:09.120 if you were to use it and for example, prevent 0:10:09.160 --> 0:10:12.240 people from going into the intensive care unit because they 0:10:12.360 --> 0:10:17.920 responded to the antibody's therapy, indeed, it could help alleviate 0:10:18.000 --> 0:10:19.520 some of the problems that are going on in the 0:10:19.559 --> 0:10:23.440 current system. And so help us understand the timeline both 0:10:23.440 --> 0:10:26.280 of how it works, UM and how soon we may 0:10:26.280 --> 0:10:28.360 see it. So, if if a patient is able to 0:10:28.400 --> 0:10:31.400 get this therapy, how soon do you see them respond 0:10:31.440 --> 0:10:36.000 if they respond positively? Uh? Well, that will depend That 0:10:36.000 --> 0:10:39.360 will depend on the on the different infectual diseases. We 0:10:39.400 --> 0:10:42.240 don't know with coronavirus. So what I would say about 0:10:42.280 --> 0:10:45.560 this therapy is that it has a high likelihood of 0:10:45.640 --> 0:10:49.439 success based on history, but that we won't know until 0:10:49.480 --> 0:10:53.800 it works because we're dealing with the new disease. So right, 0:10:53.920 --> 0:10:56.559 so it's it's the but yet yet it may be 0:10:56.679 --> 0:11:00.320 the only thing that we have immediately available. And and 0:11:00.720 --> 0:11:04.520 as to the logistics, Uh, the logistics complicated thing is 0:11:04.559 --> 0:11:07.360 you've got to locate people who are willing uh and more. 0:11:07.480 --> 0:11:09.080 And I will tell you that many people will be 0:11:09.120 --> 0:11:11.599 happy to donate. You need to bring him to a 0:11:11.640 --> 0:11:14.200 place in which I can donate the plasma. It needs 0:11:14.200 --> 0:11:17.720 to be tested for antibodies, and then that unit of 0:11:17.800 --> 0:11:22.079 plasma can be used on patients in the hospital. So 0:11:22.240 --> 0:11:26.880 randomized control trials are the next step. Um, so how 0:11:26.880 --> 0:11:30.480 do we get that going? Is it already going? Well, No, 0:11:30.640 --> 0:11:35.080 compassionate use is getting going in New York City, and uh, 0:11:35.240 --> 0:11:38.640 I understand that there are recruitment efforts in some of 0:11:38.679 --> 0:11:42.319 the medical centers, and I assume that compassionate use will 0:11:42.360 --> 0:11:46.679 begin in a few days. The randomized control trials are 0:11:46.720 --> 0:11:50.320 critical to know the affricacy this. You really want to 0:11:50.360 --> 0:11:51.880 know over the this works. You want to know how 0:11:51.920 --> 0:11:53.720 to use it, you want to know when to use it. 0:11:54.400 --> 0:11:59.520 And we have applied to the FDA for permission to 0:11:59.559 --> 0:12:03.640 do clinical trials, and we're working with the FDA, and 0:12:03.840 --> 0:12:07.000 once we get permission from them, I think the next 0:12:07.040 --> 0:12:10.640 step is to actually set it up. But given the 0:12:10.920 --> 0:12:14.320 large numbers of patients and the hospitals, and given the 0:12:14.360 --> 0:12:17.720 emergency that we're in, it's possible that we could get 0:12:18.600 --> 0:12:21.400 information and efficacy in a very short time. What do 0:12:21.440 --> 0:12:24.280 I mean by a short time a few weeks rather 0:12:24.440 --> 0:12:27.839 than rather than your typical clinical trial that goes on 0:12:27.960 --> 0:12:31.040 for months of years and so one, it's sort of 0:12:31.280 --> 0:12:35.439 very specific question. If someone donates a plasma doctor costa 0:12:35.520 --> 0:12:41.160 of all, how many patients can be essentially treated with 0:12:41.200 --> 0:12:45.640 that one patients plasma at next? It's an excellent question, 0:12:45.640 --> 0:12:47.839 and it depends that you're using I think at a 0:12:47.880 --> 0:12:50.360 minimoonent's going to be one to want that is, one 0:12:50.400 --> 0:12:53.679 person donates and gives it. But we have estimates that 0:12:53.840 --> 0:12:57.320 depending on the antibody available, you may be able to 0:12:57.440 --> 0:13:01.080 use treat two patients from one. However, if you were 0:13:01.080 --> 0:13:03.520 to break it down into UH and use it for 0:13:03.840 --> 0:13:06.559 profile access, that is, if you were to use it 0:13:06.640 --> 0:13:11.000 for preventing UH in the disease, you may need much 0:13:11.040 --> 0:13:16.400 moler amounts UM and UH. This is something that we 0:13:16.400 --> 0:13:19.800 will have to be worked out. But the important thing 0:13:19.800 --> 0:13:24.679 about antibody is that antibody always works best when given early. 0:13:25.640 --> 0:13:28.440 So so one of the we don't really know how 0:13:28.480 --> 0:13:32.560 it's going to work on a compassionate used because inevitably 0:13:32.600 --> 0:13:36.959 those are very sick patients. But I think that the 0:13:37.000 --> 0:13:40.160 regulatory agencies have decided that you know, this may have 0:13:40.200 --> 0:13:44.200 a chance of working and and it's relatively safe. Therefore 0:13:44.280 --> 0:13:49.200 compassionate use is appropriate. Dr Casa Devil. I am curious 0:13:49.200 --> 0:13:51.840 because I do feel like we're all the medical community, 0:13:51.880 --> 0:13:56.040 in particular Johns Hopkins, UH, you know, going after a 0:13:56.080 --> 0:13:58.040 lot of different things to try and figure this out 0:13:58.080 --> 0:14:00.760 as fast as possible. How do you as a medical 0:14:00.800 --> 0:14:04.840 community organized so that we're spending the time on the 0:14:04.880 --> 0:14:07.200 things that we should be to try and get this 0:14:07.280 --> 0:14:11.160 under control, get their virus under control. Well, people are 0:14:11.200 --> 0:14:13.680 working very hard, and I think that we're trying to 0:14:13.720 --> 0:14:16.920 communicate and we're trying to figure out what other people 0:14:16.960 --> 0:14:21.200 are doing, and clearly in hospitals, the RICE Coordination UH, 0:14:21.360 --> 0:14:26.080 the hospital administration and hospital the institutional review boards no 0:14:26.480 --> 0:14:30.200 know what's happening. So I think that even though things 0:14:30.200 --> 0:14:32.440 have been done in the middle of a pandemic, I 0:14:32.480 --> 0:14:36.280 think things are a lot more organized than one might think. UH. 0:14:36.280 --> 0:14:38.040 And I would point out to you that we have 0:14:38.160 --> 0:14:42.320 gone from talking about this to getting st a approval 0:14:42.400 --> 0:14:44.880 for Compassion using a matter of weeks. I mean, I 0:14:44.920 --> 0:14:48.000 think that that gives your friends of how rapid this 0:14:48.160 --> 0:14:53.720 organization is able to UH, to deliverance in some ways, 0:14:53.920 --> 0:14:56.920 some something that in ordinary times we have been very 0:14:56.920 --> 0:14:59.680 difficult to do well. We wish you only the best 0:14:59.680 --> 0:15:02.800 of buck and this is incredibly important work. We're very 0:15:02.800 --> 0:15:04.520 grateful that you took some time to tell us about it. 0:15:04.600 --> 0:15:07.200 Dr Arturo Casta Daval is the chair of the Department 0:15:07.240 --> 0:15:12.040 of the Molecular Microbiology and in Unalogy at Johns Hopkins 0:15:12.120 --> 0:15:15.000 Bloomberg School of Public Health. Of course, that is supported 0:15:15.040 --> 0:15:19.360 by Mike Bloomberg, founder Bloomberg LP and Bloomberg Philanthropyes, wow, 0:15:19.560 --> 0:15:22.880 I hope this works. Yeah right, it just sounds illogical. Alright, 0:15:22.920 --> 0:15:25.680 So good stuff to know you are listening to Bloomberg 0:15:25.720 --> 0:15:29.400 Business Week, Jason Kelly and Carol Master here with you 0:15:30.240 --> 0:15:33.840 on a busy Thursday after start of catching my breath 0:15:33.880 --> 0:15:38.400 here Carol, because it's been fast moving, to say the least, 0:15:38.400 --> 0:15:41.600 and we know it's been fast moving for the magazine. Uh, 0:15:41.760 --> 0:15:45.600 some really interesting coverage around Boeing, and we want to 0:15:45.640 --> 0:15:48.600 get into that with Joel Weber, the editor of Bloomberg 0:15:48.800 --> 0:15:51.040 Business Week. He's on the phone from Brooklyn, and Jim 0:15:51.040 --> 0:15:54.440 ellis assistant man assistant managing excuse me for Bloomberg Business Week. 0:15:54.640 --> 0:15:57.120 He's on the phone from the great state of New Jersey. Joel, 0:15:57.160 --> 0:15:59.680 I want to start with you set this up for us, 0:15:59.720 --> 0:16:02.880 But is this is a classic Business Week story in 0:16:02.920 --> 0:16:05.920 a lot of ways. Yeah, well, I mean, obviously there's 0:16:06.160 --> 0:16:10.360 been a ton of of just interest in sort of 0:16:10.360 --> 0:16:12.800 what's happening on the bailout front, and the company like 0:16:12.840 --> 0:16:16.720 Boeing is an especially interesting one because, um, you know, 0:16:16.760 --> 0:16:20.400 they're one of two companies in the world that basically 0:16:20.480 --> 0:16:22.800 makes all the planes that we used to fly on. 0:16:23.400 --> 0:16:25.640 And you know, as everyone knows, like that was a 0:16:25.640 --> 0:16:29.040 company that also became embroiled in uh, you know, a 0:16:29.080 --> 0:16:32.520 major catastrophe and was under the gun for for a 0:16:32.560 --> 0:16:34.800 lot of that and then lo and behold, you know, 0:16:34.800 --> 0:16:37.520 if here it comes to coronavirus and it's totally throwing 0:16:37.520 --> 0:16:40.240 a wrench in all of it. So of course they've 0:16:40.640 --> 0:16:43.560 they've raised their hand as part of this bailout process. 0:16:43.880 --> 0:16:46.560 Uh you know at sixty billion was the number that 0:16:46.640 --> 0:16:48.960 kind of came out. But they're not alone in terms 0:16:49.000 --> 0:16:51.760 of just being one of many actors that are suddenly 0:16:52.320 --> 0:16:55.200 um you know, raising their hands and actually asking for 0:16:55.320 --> 0:16:57.920 government aid. And that was sort of where Janella's came 0:16:57.920 --> 0:16:59.480 in on this, and we did sort of a big 0:16:59.520 --> 0:17:02.720 takeout in the business section looking at all the ways 0:17:02.760 --> 0:17:06.680 that the bailout moment is here and also that there's 0:17:06.720 --> 0:17:12.160 some resistance to giving bailouts to companies like Boeing. Jim, Um, 0:17:12.160 --> 0:17:14.880 what did we what do we learn? Well? I think 0:17:14.880 --> 0:17:16.880 one of the things that was so interesting about taking 0:17:16.880 --> 0:17:19.840 a look at Boeing is that, um, uh you know, 0:17:20.000 --> 0:17:23.320 there's not a lot of question that um, you know, 0:17:23.520 --> 0:17:26.280 this is a business that has been slammed by the virus. 0:17:26.359 --> 0:17:29.000 I mean obviously, um you know, this is a business 0:17:29.000 --> 0:17:32.200 that supplies airlines. Airlines, you know, they contend on people 0:17:32.200 --> 0:17:34.840 to fly people are not flying, you know, and so 0:17:35.040 --> 0:17:38.240 basically they can't buy planes, and so a company that 0:17:38.320 --> 0:17:41.120 sells planes is in a in a bad way. Now 0:17:41.200 --> 0:17:44.160 the issue though, is um you know, if there's this 0:17:44.440 --> 0:17:47.440 honey pot that Washington has to give out, should they 0:17:47.440 --> 0:17:50.240 be giving it to, you know, certain types of companies, 0:17:50.440 --> 0:17:51.919 and should they be giving at the companies with all 0:17:52.000 --> 0:17:54.040 sorts of strings, And should they be giving it to 0:17:54.080 --> 0:17:56.399 companies that a lot of people consider to be I 0:17:56.400 --> 0:17:58.640 don't want to use their bad actors, but at least 0:17:58.640 --> 0:18:01.800 people who have not often behaved in ways that a 0:18:01.800 --> 0:18:04.399 lot of people in Washington have agreed with. And so 0:18:04.520 --> 0:18:07.399 Boeing became this very interesting thing to look at for 0:18:07.440 --> 0:18:11.240 a number of reasons. First, you know, they have UM. 0:18:11.320 --> 0:18:15.600 You know, in the past decade they've done forty about 0:18:15.600 --> 0:18:19.080 forty forty four billion dollars in stock buybacks. Now a 0:18:19.160 --> 0:18:21.320 lot of people say that that you know, has basically 0:18:21.359 --> 0:18:24.399 given money back to investors, didn't really sort of build 0:18:24.440 --> 0:18:27.520 the business per se on that. Now they've come up 0:18:27.560 --> 0:18:29.880 and said, oh god, you know this is happening. Now 0:18:30.200 --> 0:18:33.119 we think that the auto that the aerospace business ought 0:18:33.119 --> 0:18:37.200 to have sixty billion dollars in UM and help now, 0:18:37.240 --> 0:18:39.520 that's uh. And so a lot of people are saying, 0:18:39.880 --> 0:18:42.560 why if you've done in the past year, in the 0:18:42.600 --> 0:18:45.439 past years given back a lot of money that you 0:18:45.480 --> 0:18:48.120 should have maybe saved, and now you're coming to beg 0:18:48.160 --> 0:18:51.560 from us, especially after the behavior that sort of came 0:18:51.600 --> 0:18:55.680 out in the seven thirty seven MAX investigations that, um, 0:18:55.680 --> 0:18:58.480 a lot of people thought that they were a little um, 0:18:58.600 --> 0:19:00.960 you know, that they were not as following the program 0:19:01.040 --> 0:19:03.639 as closely as possible and that prob you know, that 0:19:03.720 --> 0:19:06.359 program you know, sort of went bad and led to 0:19:06.480 --> 0:19:09.159 over three deaths. Well, what's interesting, Jim, is it I 0:19:09.200 --> 0:19:11.919 totally get this debate, um, but it's it's not just 0:19:12.000 --> 0:19:16.280 about Boeing. Boeing has a massive supply chain, and I 0:19:16.320 --> 0:19:18.679 do wonder when they're talking about we need a sixty 0:19:18.680 --> 0:19:21.640 billion dollar bailout, how much goes for them, how much 0:19:21.640 --> 0:19:26.440 goes for others? Well, Um, that is um a question 0:19:26.480 --> 0:19:29.760 that still hasn't been answered. Um. The way this worked 0:19:29.880 --> 0:19:33.600 is that Boeing has uh, you know, said that that's 0:19:33.800 --> 0:19:36.280 that's what they think should go for the aerospace business. 0:19:36.320 --> 0:19:38.359 And let's face it, most of the aerospace business in 0:19:38.400 --> 0:19:41.760 the US is based around you know, Boeing and to 0:19:41.920 --> 0:19:45.600 some extent some other defense contractors, but UM, a lot 0:19:45.640 --> 0:19:49.840 of it would go to the people in the supply chain. 0:19:50.160 --> 0:19:53.240 But what's happening is that Boeing would probably be the 0:19:53.280 --> 0:19:57.320 people who sort of decide who gets the money. Now 0:19:57.480 --> 0:19:59.639 they have um as they like to say they've got 0:19:59.680 --> 0:20:04.160 seven teen thousand suppliers and that the aerospace business supports 0:20:04.160 --> 0:20:07.120 about two point five million jobs in the US. That's 0:20:07.160 --> 0:20:09.919 a lot of jobs thick, it's a lot of manufacturing jobs. 0:20:10.240 --> 0:20:13.720 So UM people want to UM, you know, be right 0:20:13.800 --> 0:20:16.120 by them. But at the same time, people are saying, 0:20:16.160 --> 0:20:19.560 shouldn't there be more transparency about where that goes? And 0:20:19.680 --> 0:20:23.040 currently in the what little we know about the real 0:20:23.160 --> 0:20:27.359 details of the package so far, it looks like UM 0:20:27.400 --> 0:20:30.760 two ways that somebody like Bowing could be supported. Number 0:20:30.800 --> 0:20:36.080 one is through the direct support that the package gives 0:20:36.119 --> 0:20:39.879 to well, indirectly they'll get they'll benefit from the airlines. 0:20:39.920 --> 0:20:42.080 It's gonna be probably about forty six billion for the airlines, 0:20:42.160 --> 0:20:46.200 but there's a seventeen billion dollar of set aside or 0:20:46.520 --> 0:20:50.800 for companies that are affect national security. Now. Bowling is 0:20:50.800 --> 0:20:54.280 the second largest defense contractor in the US, and it 0:20:54.400 --> 0:20:57.960 also is the only uh major company in the US 0:20:58.200 --> 0:21:01.199 that can actually build a passing gru jet. So in 0:21:01.240 --> 0:21:04.800 that sense, a lot of people are saying that looks 0:21:04.840 --> 0:21:08.359 to be almost a little earmark, you know for Boing. 0:21:08.720 --> 0:21:10.760 We don't know that yet. We won't know it until 0:21:10.880 --> 0:21:15.000 probably um the money starts hitting out. But in this sense, 0:21:15.520 --> 0:21:18.480 we understand that they're they're they're not going to be forgotten, 0:21:18.560 --> 0:21:21.240 let's put it that way, well until it does. Feel 0:21:21.320 --> 0:21:23.480 like one of the big questions as we go over 0:21:23.520 --> 0:21:26.560 the next few months and maybe even into one is 0:21:26.920 --> 0:21:31.119 who gets what and who sort of gets to maybe 0:21:31.119 --> 0:21:34.040